Standard "fundamental + behavioral" stock valuation sheet
3b. Using the image to make a full stock valuation sheet
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Remember the stock for which we calculated an EEV / estimated economic value. OK, see it?
To complete its valuation, we need its range of potential image coefficients.
=> We will see below how to find it.
In this example, let us say that this range is
0,8 (1,2) 1,7
Valuation sheet for the stock:
_______________________________ in Euros
EPS 5 (projected earnings per share in 5 years)
x "Primary" P/E coefficient
3,10
x 12
Present gross dividend
x number of years
x 5
Total = EEV / Estimated economic value
Minimum potential
Structural
Maximum potential
x Estimated Image coefficient x 0,8 x 1,2 x 1,7 = PMV / Potential market value
Observation: for fun, we may divide those PMV by the present EPS (2,5 Euros)
=> This gives potential P/Es (on present earnings) of 17 (mini) 25 (structural) and 35 (maxi)
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To make your calculation with your own data for the stocks you want to evaluate, you can use easily:
Either the above model,
Or better, the link to our instant valuation calculator:
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Well, the potential image range appears in the next page (images tables A + B).
Thus, in the above example:
* Using table A, we placed the stock in the "good moderately cyclical medium-size firms".
For more precisions on that category, check the image types descriptions in page 5.
* We chose, in table B, an image range matching that category. We adapted a little the numbers,
the stock having also some traits from another category.
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Stock name: ____________________ Simulation updated on: __.__.__ |
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Pick your scenario |
1 |
2 |
3 |
4 |
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A - Estimated Economic Data |
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. EPS 5 years variation estimate (1) |
+ 20 % |
+ 30 % |
+45% |
+ 60% |
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. Estimated EPS in 5 years time |
3.6 |
3.9 |
4.3 |
4.8 |
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. Estimated normalized midcycle EPS |
(2) |
(2) |
(2) |
(2) |
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. Current or estim. (3) interest rate (bonds)
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4,0 % |
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. Primary P/E (see PP/E table) |
11 |
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B - Estimated Economic Values (EEV) calculations |
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. EPS x primary P/E = |
39,5 |
43 |
47,5 |
53 |
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. Present gross dividend x 5 = |
1,6 x 5 = 8 |
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. EEV (= EPS x primary P/E + 5 x dividend) |
47,5 |
51 |
55,5 |
61 |
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C - Estimated Potential Image coefficients |
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. Image stability / structural image level => Stock family |
low volatility / medium level => classical stock |
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. Low image (4) |
0,80 (5) |
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. Structural image (4) |
1,20 (5) |
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. High image (4) |
2,00 (5) |
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D - Estimated Potential Market Values (EPMV) |
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. Low EPMV (= EEV x low image) |
38 |
41 |
44,5 |
49 |
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. Structural EPMV (= EEV x structural image) |
57 |
61 |
66,5 |
73 |
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. High EPMV (= EEV x high image) |
95 |
102 |
111 |
122 |
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E - Price / Value rating simulation |
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Current price. Current value ratings |
88 |
Abs: 3 / Rel: 4 (6) |
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(1) In current money value (not deflated)
often the contrary.
(3) You may use estimated rates instead of current ones if you expect important forthcoming rate changes
(4) The narrowest (= with the least stocks) indexes, such as the CAC or
DJ, are a reference for many operations.
Stocks belonging to such "exclusive" clubs have a liquidity and notoriety above the whole market.
Thus their prices enjoy a specific quality premium, with images
about 10-25 % higher than those shown in B
table.
(5) We might have identical low / high image brackets in each scenario even if, more
often, images tend to be high when
EPS are rising and low when they are falling.
(6) 1 = very expensive, 2 = expensive, 3 = rather expensive,
4 = average, 5 = rather cheap, 6 = cheap, 7 = very cheap;
Abs = in absolute / Rel = relative to the whole market level
(this supposes to have made in parallel a current price rating of the market, see SP 500 sim).
This
page last update
21/11/11
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